Retail Theory and Practice: UK Fashion Retail Sector Analysis Report

This report provides a comprehensive analysis of Debenhams, a multinational fashion retail company, within the context of the UK fashion retail market. The introduction establishes the concept of retail and introduces Debenhams, detailing its history and current operations. The report delves into key changes within the UK fashion retail sector, utilizing a PESTLE analysis to examine political, economic, social, and technological factors influencing the industry. It further explores the micro-environment using Porter's Five Forces to assess competitive dynamics. The report identifies challenges faced by Debenhams and proposes strategies and tactics, including differentiation strategies and technological implementations, to address these issues and adapt to evolving market trends. The application of the Wheel of Retailing theory is also discussed. The conclusion summarizes the key findings and recommendations, offering insights into how Debenhams can navigate the complexities of the fashion retail landscape.

Retail Theory and Practice
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Table of Contents
INTRODUCTION...........................................................................................................................3
Introduction to retail........................................................................................................................3
Introduction to company..................................................................................................................3
Key relevant changes within the UK fashion retail.........................................................................4
Relevant changes within the micro environment.............................................................................6
Suggest and discuss strategies and tactics that could be used.........................................................7
RECOMMENDATIONS.................................................................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10
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INTRODUCTION
The term “retail” refers to the sale of commodities or services to individual consumers for
their use. Hereby, several channels of distribution are taken into use in order to earn high profits
and revenue. Within the bounds of modern world, it is seen that retailers fulfil the requirements
and demands of people via the usage of supply chain. The current project seeks to comprehend to
notion of retail theory and practice by selecting Debenhams as the company. The report includes
introduction to retail and the selected company. This project further consists of changes taking
place in UK fashion retail market along with retail environment. In addition to this, the report
covers the issues encountered by the organisation together with the strategies utilised for
bringing up changes into the corporation.
Introduction to retail
The term ‘retail’ is used for the sale of goods and services to customers for the purpose of
consumption by them. In addition to this, retail is the term used exclusively for a service provider
that offers small orders of large quantity to the end users rather than offering large orders of
smaller quantity. In this context, modern retailers undertake several strategic decisions along
with tactical moves such as determining store type, product mix, customer service, market
positioning, target market, support service, after sales services, and so on. Further, it is
ascertained that retail outlets operate in a number of formats as well as contexts like strip
shopping complex, large stores, indoor shopping mall, and many more.
Fashion retail is ascertained to be a part of retail sector that is concerned with
ascertainment of latest consumer lifestyle and market trends, and then undertaking measures to
offer products that can meet the expectations and lifestyle standards of consumers. This is aimed
at gaining high level of contentment from them.
Introduction to company
Debenhams is a multinational fashion retail company which functions in the form of
departmental stores across the whole of the United Kingdom and Denmark, along with franchise
stores in the confines of other nations. This organisation was founded during the 18th century in
the form of a single store within London and has now expanded into 178 stores across the globe.
The company offers a wide array of household articles, furniture, clothing items, etc. In
accordance with the reports of June 2020, this fashion retail organisation owns and operates
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almost around 122 stores within the confines of Denmark as well as United Kingdom. Now, it
has been ascertained that the stores within the bounds of Denmark carry out trade under the
brand named Magasin du Nord. Debenhams has occupied majority of the sites of any of the
traditional departmental store groups within the United Kingdom. Maximum of the actual trade
names of these stores within all of the respective territories, were substituted with the name
“Debenhams” during the era of 1970s. Thus, all the departmental stores within the group are now
traded as ‘Debenhams’ except the store within Chester that is yet dual signed in terms of Browns
of Chester and Debenhams. Within the month of April of the current year, the outlets operating
within the Republic of Ireland via Debenhams Ireland stopped to trade resulting into a total loss
of approximately 2000 jobs. The 4 stores of this fashion retail company situated within the
Northern Ireland are included in the business of UK.
Key relevant changes within the UK fashion retail
The UK fashion retail sector has largely evolved with the passage of time. In this relation,
it has been identified that there are several companies that operate within the confines of this
market. This increases the complexity as well as intensity of competition pertaining to this
sector. As a result of this, the sector has to undergo several changes so as to increase the stake of
this industry within the global marketplace. In this relation, Debenhams is a corporation that
stays tuned to most of the changes that take place within the bounds of the UK fashion retail
sector. The key relevant changes that have been witnessed in context of fashion retail market of
United Kingdom are discussed beneath with the help of PESTLE analysis.
PESTLE Analysis
This is a business management tool which helps an organisation to identify the macro
environmental trends that place influence upon companies to get accustomed to them and
thereby modify the operations accordingly. This is one of the most widely used models in
strategic management as it enlists all the relevant changes that take place within a particular
region in relation to a particular sector or the commercial sector as a whole. PESTLE analysis is
carried out in context of the UK fashion retail sector as follows:-
Political factor- The aspects which are taken into consideration while studying this
macro environmental factor consist of governmental stability, political stability, taxation,
industrial regulations, global trade agreement and/or restriction, etc. In this relation, the recent
decision taken by United Kingdom to leave European Union has weakened the value of pound.
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This has created uncertainties in context of future trade within the bounds of Europe. The profit
margins of companies operating within almost all the sectors, especially the retail sector
(fashion), have been affected with this move. In addition to this, several fashion retail outlets are
situated within City central locations of United Kingdom. These are affected by the terrorism
threat as it leads to decline in the footfall of customers into the stores.
Economic factor- The aspects which pertain to economic factors are exchange rate,
globalisation, economic growth / slowdown, inflation, interest rate, cost of living, labour cost,
consumer spending, etc. Owing to BREXIT, economic uncertainty is prevailing within the
bounds of United Kingdom. This has affected businesses along with investors within the fashion
retail sector. It is further known that the cost of running manufacturing facilities within the
confines of the United Kingdom is quite high. This has largely affected the businesses that are
operating within the manufacturing domain of the corporate world. Besides this, BREXIT has
even affected the consumer spending capacity of people within the respective country
demonstrating the plight of fashion retailers like Debenhams.
Social factor- Several elements are included in social factor, consisting of consumer
lifestyles, consumer trends, career attitudes, fashion, demographic features, consumer purchasing
patterns, and so on. It is seen that the consumers in the modern era are largely aware of all the
latest trends and patterns prevailing in marketplace. This put pressure over the companies in this
sector to come up with lucrative trends like personalisation to stay aligned with customer
demands. The people with the maximum disposable income fall under the age group of 40-65
years. However, the most attractive age group for fashion retail sector is 24-36 years. The trends
that have been affecting this industry are acknowledged to be athleisure, size inclusive fashion,
sustainable material usage, etc.
Technological factor- It includes aspects like automation, disruptive technologies, social
media, innovation, robotics, AI, security, etc. In this relation, e-commerce is one of the emerging
trends that have been changing the UK fashion retail sector. Further, social media marketing, AI,
cognitive computing, AR, VR and analytics are some of the other trends that have a significant
influence over the companies that are carrying out their business operations within the bounds of
the respective industry.
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Relevant changes within the micro environment
The micro environment of retail sector has evolved with the efflux of time. These
changes are largely related to the extensive competition, changes in consumer trends and
demands, new technological trends, and so on. These changes affect the business operations of
companies that function in the fashion retail sector like Debenhams. This has been further
analysed by applying Porter Five Force model to the respective industry.
Porter's Five Force Analysis
Porter’s five force analysis is acknowledged as the effective framework that provides
contribution in developing understanding on the industry in detailed manner. The respective
framework is supportive in determining better strategies through which company can easily
improvise their organisational performance in rightful manner. With reference to Debenhams,
the respective manager of this company is planning to conduct an effective porter’s analysis for
finding out strategy through which they can maximise their business performance. All of these
forces are explained as below:-
Threat of New Entrants: Influence of this force is quite low for Debenhams as the
industry require huge capital investment in order to establish their business effectively and
maximise their business performance in rightful manner.
Threat of Substitutes: The overall magnitude of this force is higher for the Debenhams.
This is so because, the competition within the sector is high which clearly states that every
organisation dealing into the same are taking several initiatives for introducing something new
every time. As a result, it increases chances of substitute within the same sector.
Bargaining power of Buyer: Power of buyer in every industry is higher as they as they
are the only one who buys the product and provide benefits to the same company. In context of
the Debenhams, it can be said that the respective company is required to provide high quality
cloths at affordable prices to its customers with the motive of influencing their interest towards
them so that they can maximise their sales performance as well as profitability in rightful
manner.
Bargaining power of supplier: Bargaining power of the buyer is relative low for
Debenhams; this is so because, the company is large in scale thus it provides bulk orders to the
suppliers. In case these suppliers do not gets agreed on the provided quotation then the company
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could easily move to another supplier for maintaining their cost and fulfilling their requirements.
This clearly depicts that the bargaining power of supplier is low for Debenhams.
Competitive rivalry: Competition within retail industry is relatively higher. This simply
means that it is really difficult for Debenhams to maintain its positioning within the company.
Thus they are required to offer all of its products at affordable prices without compromising with
the quality.
Suggest and discuss strategies and tactics that could be used
Fashion retail sector has been facing several discrepancies owing to the changes taking
place in the micro and macro environment. In this regard, two of the most important
issues/challenges for Debenhams along with the strategies and/or tactics that can be applied to
address them, have been discussed below:-
Social Change
Due to the trend of globalisation, customers now focus upon getting quality products over
price friendly products. Their demands are aligned with the latest market trends. This challenge
needs to be timely addressed by Debenhams in order to avoid any kind of negative impact over
its business operations.
 The fashion retailer can implement differentiation strategy which will assist in creating a
separate identity within marketplace ahead of the rival firms. This will help in attracting a
large base of customers and gaining high profits.
Technological change
With the passage of time, new technological trends emerge in market place. The fashion
retail sector at present has been largely dominated by trends such as AR, VR, AI,
personalisation, robotics, analytics, etc. These put pressure over the companies and present a
challenge in front of them to implement these as early as possible to increase their market share
and brand value.
 To address this, Debenhams can carry out constant market research to find out the latest
technologies that can be sustainably implemented within the organisational premises.
Thus, the company can implement current and future trends like mobile computing,
social media networking, cognitive computing, AI and analytics and many more.
Wheel of Retailing
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It is basically acknowledged as the theory which is used to explain the changes which
occurs while incorporating innovations and entering into the retail sector. The respective
framework mainly includes four steps which are explained below:
Establishing and penetrating in the market- Here, attention is provided to the new
retailers who enter into market with lower prices. In this, profit margin is low.
Expanding in the market- When these retailers gain more experience of the market, they
enlarge their customer base with the purpose of increasing sales gaining a higher profit margin to
acquiring a significant market share.
Stabilized business model attracting margins- Here, the company already in an
established position and gain or earn profit by using its high pricing strategy.
Entry of another retail competitor- At this step, various competitors enter in the market
and they create competition for the existing companies.
RECOMMENDATIONS
On the basis of the analysis done above over the retail environment and the changes
taking place within the UK fashion retail sector, it has been analysed that there are some issues
with the operations of Debenhams. To deal with these, certain recommendations have been
provided which will provide assistance to the top management. Thus, such recommendations are
enlisted as follows:-
 It is recommended that Debenhams should carry out constant market research in order to
identify the latest and emergent market trends in context of fashion retail market. This
will also provide assistance to the enterprise in taking steps towards offering products
which can meet the needs and demands of customers, thereby gaining extensive
contentment from them.
 In addition to this, it has also been suggested that several technologies can be
implemented by the respective fashion retailer to enhance the sales and profit margins.
Such technologies may include cognitive computing, AR, VR, personalisation, and so on.
These will give a boost to the current financial position of Debenhams and develop a
strong base of customers who would exhibit loyalty towards the brand in the long term.
 The respective fashion retail company can make use of a wide variety of distribution
channels in order to reach out to a large base of customers. This will provide Debenhams
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with an opportunistic chance to increase its revenues and thereby strengthen its market
positioning in the long run.
CONCLUSION
From the above analysis, it can be summarised that the retail environment is turbulent
and keeps on evolving with the passage of time. The UK fashion retail sector over the course of
time has also witnessed some changes that have been reflected with the help of PESTLE
analysis. In addition to this, it is determined that there is high competition within the fashion
retail sector which put pressure over the companies to adopt effective strategies that can provide
an edge to them over the rival firms operating within the same sector. Furthermore, certain
suggestions can be taken into account by the fashion retailer in order to inflate its profit margins
and revenues. It is suggested that the organisation should carry out constant market research into
the latest trends and customer demands. Additionally, it is suggested that the company should
use technologies like VR, cognitive computing, AR, etc.
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REFERENCES
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